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AsDB PASO – Investing in aviation safety in the Pacific

Organization(s):

Council of Directors (comprising of representatives of each member country that sets policy and monitors implementation and enforcement of technical findings of PASO), National Civil Aviation Authorities of member countries (CAA), Pacific Islands Forum Secretariat , Private air transport service operators, Asian Development Bank – Pacific Department, International Civil Aviation Organization (ICAO)

Country (ies):

PASO member countries which are currently Parties to the Pacific Islands Civil Aviation Safety and Security Treaty (PICASST) are: The Cook Islands, Kiribati, Niue, Nauru, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. Countries which are also members of PASO but not Parties to the PICASST are: Australia, Fiji, and New Zealand.Associate member organizations of PASO are: The Asian Development Bank, Association of South Pacific Airlines (ASPA), USA Federal Aviation Agency UFAA, and the Pacific Islands Forum Secretariat (PIFS). PASO membership is open to all Pacific Island Forum member countries.

Overview:

The PASO project is a regional technical cooperation through intergovernmental finance and institutional development to improve safety and security standards within the aviation sector of the Pacific Islands participating countries.

Aviation safety and security are public goods. However, given the small and fragmented nature of the Pacific aviation sector, it is difficult to provide the necessary oversight on a national and regional basis to ensure adequate provision. Aggregation of services or functions on a regional basis creates economies of scale and scope that transform their provision.

The Pacific Plan recognizes that a new and innovative approach to the unique challenges that the Pacific island countries face is through a framework of greater regional cooperation and integration – the PASO project is aligned to this proposition.

Background:

What was the purpose, and overall goal of the SSC activity/project? What was the development challenge to which this SSC Activity was meant to address? Why did the partners engage in the SSC activity?
Forum Leaders recognize the strategic role of international air transport in the sustainable development of Pacific island economies, and air transport issues had been identified as a serious challenge of the region. To support economic growth, air transport operations must comply with internationally recognized standards. However, Pacific island countries faced financial limits and shortages of skilled personnel to perform these essential functions, and often failed to meet requirements.

In 1998 the Forum Aviation Ministers adopted an Action Plan that adopted a policy framework for safety regulation recognizing that Pacific island countries had difficulties in developing and maintaining their own skills base for aviation safety inspection and certification. Ministers recognized that safety oversight services could more effectively and efficiently delivered through a collaborative mechanism, allowing for the sharing of expert resources and costs, and agreed to the creation of a collaborative regional aviation safety oversight program.

In September 2001 Forum Aviation Ministers approved in principle an intergovernmental cooperative approach to establishing PASO. It was also at this time that Ministers also required that security be added to the tasks of PASO.

What was/is the broad design of this SSC project?
The primary goal of PASO is to provide long-term improvement in quality and extension of services at lower costs than would have to be paid by the sector and member governments to achieve these goals by themselves.

PASO provides advisory service to the national civil aviation authorities of participating countries and provides support to the local aviation sector.

PASO provides shared regional capacity on a fee-for-service basis. It will become self-sufficient by reducing duplication, creating economies of scale, harmonizing regulatory systems, sharing scarce technically-qualified personnel, and thus reducing the unit costs of oversight. For example, rather than appointing (and then under-utilizing) specialized national inspectors, regional inspectors are employed to provide the necessary services for all. Airlines also save on compliance costs, as a harmonized regulatory system relieves them of the need to operate consistently with multiple national frameworks. Additional benefits include priority service when safety issues arise, which does not necessarily happen when oversight is provided by contract agencies, and an enhanced opportunity for skills transfer to national civil aviation authorities.

The establishment of PASO is expected to become the nucleus of a larger region-wide initiative in the future. It is anticipated that other countries will join PASO over time as their needs require and as the organization demonstrates its value and capabilities. It is also expected that some countries will utilize PASO services on a contract basis. PASO is designed to accommodate future growth through both of these mechanisms.

How did the political context or previous cooperation influence the planning process?
Previous unsuccessful efforts at cooperation in the sector provided three important lessons that were incorporated. First and foremost, political decisions alone are insufficient to sustain regional cooperation. PASO will be successful to the extent that it saves countries money on safety oversight, and thus becomes sustainable through the fee-for-service model. Secondly, an international treaty provides the basis for mutual oversight and enforcement of national compliance with safety and security standards. Thirdly, mutual cooperation in developing standards and processes, primarily by sharing existing national documentation and systems, made the task of building a regional institution more efficient.

Implementation:

What kinds of SSC activities or modalities were conducted? What are the services (e.g. training, inspections, etc) is PASO providing the members states? What resources are shared and exchanged by each member states? Regional cooperation or south-south cooperation through the PASO project is enabling three special features to emerge: (i) incentives for increasing harmonization and membership through "network benefits", (ii) the benefits from net positive contributions to regional regulatory and oversight services by the larger and better-developed national CAAs, and (iii) greater independence and accountability for policy and regulatory functions.

Network benefits refer to the increasing value of membership as the scope of the organization grows. As harmonization proceeds, and economies of scale decrease the unit costs of service provision, it becomes increasingly cost-effective for additional countries to join PASO as the organization demonstrates its value and capabilities. Increasing scale and scope also enables PASO to reduce the costs to its members of specialized outside expertise that may be contracted for infrequent services such as approvals of new aircraft types or airlines, and engineering support for major modifications or repairs of aircraft.

The potential for net positive contributions to the regional initiative arises with respect to the CAAs of Fiji and Papua New Guinea, which have relatively large existing organizations that provide services to PASO on an as-needed basis. That is, experienced personnel are invited as resource persons in training, inspections, operations manual development, etc. This model also allows regional personnel to become fully qualified to international standards and eventually replace international staff.

PASO is responsible for overseeing regional aviation safety oversight for its members. Responsible for overseeing airport and airline operational safety and security standards and ensuring they are met in its member countries. Its core set of responsibilities includes: flying operations, airworthiness, security, airports, and personnel licensing for these disciplines.

PASO provides an advisory service to the national CAAs of participating countries and provides support to the local aviation industry.

PASO carries out audits and inspections, through its inspectors, and submits the reports to the national CAA. These reports do not only identify deficiencies but will also set out the required remedial steps and possibly alternate remedial steps. Once recommendations are accepted and enforced by the national authority, their implementation will be continuously monitored by PASO until full compliance has been achieved. These audits and inspections will be undertaken in accordance with the legal environment of the State of operation, using local regulations and ICAO Standards and Recommended Practices (SARPs) as the base materials.

It also provides training to administrators of national CAAs of member countries. All technical staff is based in the PASO office, and their work is programmed centrally based on annual work programs negotiated with each member country.

Problem encountered
Under-utilization of PASO services pushing the operational revenues below projection thus requiring modification of the business plan.

Outcomes:

What were the planned and unplanned achievements of the SSC experience?
The project will result in the Pacific aviation sector meeting all international requirements for civil aviation safety and security oversight.

The establishment of a single regional organization that replaces and updates the current system of fragmented national authorities will create economies of scale that allow the organization to become financially self-sustaining, while at the same time lowering costs and improving service quality.

The direct beneficiaries of the project include the governments of member countries that will be able to rationalize their civil aviation administrations and lower public sector costs; commercial air transport operators that will experience lower regulatory compliance costs and more responsive services; and all users of air transport that will benefit from higher safety and security standards.

Indirect beneficiaries include stakeholders in the tourism industry, and those that depend on their earnings, by avoiding the potentially catastrophic effects of accidents resulting to a reduction in arrivals caused by a serious safety or security incident.

Institutional Reform
The project will ensure that laws, regulations, technical documentation, and procedures are up to date, compliant with ICAO requirements, and harmonized across the region.

Airlines will face a consistent operating environment in all countries, thus improving safety and reducing costs.
National CAAs will benefit from higher quality services than are currently available through existing ad hoc arrangements. As well from highly needed trainings thus developing their administrative and regulatory capacity.

PASO is a source of dedicated aviation experts that provide administrative backup to governments by proactively planning and implementing oversight. In addition, since it is a regionally controlled intergovernmental organization mandated by an international treaty, the organization's credibility and stability are safeguarded.

Are these outcomes sustainable? Could they be replicated in similar contexts?
PASO operates on a self-sustaining basis. Because aviation safety and security has an element of international oversight and enforcement, member countries have very strong incentives to cooperate in this area, and thus strong incentives to utilize PASO services which are offered at lower cost than the other service providers.

This model of regional cooperation adopted for PASO is already being extended in the Pacific for the provision of public-sector financial audit services, and in fact was well established many years ago by the creation of the University of the South Pacific, the world's first multi-country university.

Did the relation between the providing and receiving countries / governments / organizations change with this experience? Why and how? For a region with close historical, cultural, political, economic and geographic links a south-south cooperation approach to address common issues can be the best approach. PASO realized the benefit of having a regional approach when conducting audits or inspections. For example, the sharing of exeprience among operators and administrators from different member countries allows for development of more alternative solutions, and often require common solutions for common concerns.

International events as well as those coordinated by PASO such as summits, forums, trainings, seminars and workshops also provide opportunities for operators and administrators of member countries to share their safety and security issues and experiences, Key issues, common failings and best practices identified, and common solutions were determined. These also provide venues for networking and areas of collaboration were identified.

Forum Leaders agreed that the serious challenges facing the Pacific region warranted serious and careful examination of the pooling of scarce regional resources to strengthen national capacities. PASO set a good example of this, and a good example is in gaining approval on the use of reduced power during take-offs of the Twin Otter as this significantly increase the life of the turbine engines while maintaining an acceptable margin of safety. Operators can share the cost of proving this.

In November 2009, CARICOM member states made an official request to enter into MOU with PASO for closer cooperation and ties as small islands states working together to achieve similar goals. This is a very positive step by the PASO member countries ensuring that they work in tandem with other similar sized countries, swapping information and learning from each other what they are doing in terms of aviation safety and security oversight.

Aid Effectiveness:

Was national leadership supported? To which extent was the experience aligned to national priorities and systems?
Pacific Aviation Safety Office
In 1998 Forum Aviation Ministers adopted an Action Plan to adopt a policy framework for aviation safety regulation. Then in 2001 the Forum Aviation Ministers met and approved in principle an intergovernmental cooperative approach to establishing PASO.

The establishment of PASO is contained in the Pacific Plan's Implementation Strategy for economic growth which aims to improve efficiency and effectiveness of infrastructure development and associated service delivery.

Council of Directors PASO is governed by a Council of Directors comprising of representatives from each PASO Member Country and invited Observers who include the Association of South Pacific Airlines (ASPA), the Asian Development Bank (ADB), the International Civil Aviation Organization (ICAO) and the Pacific Islands Forum Secretariat.

The Council of Directors supports the mission of PASO to inculcate an aviation safety and security culture in the Pacific. It provides policy and strategic direction to PASO.

Therefore the PASO goals and activities reflect the priorities of each member governments towards their goal of enhancing and stimulating economic growth among Pacific Island Forum States thru improved efficiency and effectiveness of infrastructure development and associated services delivery.

Has there been an effort to harmonize and coordinate with other programs and development actors?
PASO is receiving (or had received) support from ADB, International Financial Facility for Aviation Safety (IFFAS), New Zealand Government Security Fund, AusAid, Vanuatu Government, Australian Business Volunteers, Pacific Islands Forum Secretariat, etc. As support are coming in different forms (financial and human resources, loans and grants, etc.) and time coordination and harmonization with other providers and sources are crucial to sustain its operations especially during the initial stage.

To illustrate, in 2006 ADB, IFFAS, ICAO and PASO collaborated together in finalizing the TORs for ADB technical assistance project to avoid the conflict of work between IFFAS and ADB funded part of the project.

The funding from ADB was used to finance the operations of the PASO office, including the hiring of technical personnel. While an associated technical assistance (TA) grant financed the regulatory and legislative harmonization and recertification of airlines, with the additional funding from the New Zealand Government Security Fund.

This regional initiative has been part of the Forum aviation action plan for almost ten years with the contributions of the PASO Council of Directors, ADB and guarantor Governments for enabling this financial support to PASO. According to Pacific Islands Forum Secretariat this is certainly an example of a model that can be replicated to encourage the development of regional cooperation in other sectors.

Was managing for results included in the experience?
Yes, as the project is supported by an ADB loan, a design and monitoring framework was prepared and is updated and evaluated during regular review missions – this covers the managing of development results.

Capacity Development:

Aviation Sector and National Civil Aviation Authorities
The sector will meet all international requirements for civil aviation safety and security regulation and oversight oversight in accordance with Pacific Islands Civil Aviation Safety and Security Treaty (PICCAST) thru the provision of timely advice and guidance in aviation safety and security.

The sector will be ensured that laws, regulations, technical documentation, and procedures are internationally recognized, compliant with ICAO requirements, and harmonized across the region.

The establishment of a single regional organization that replaces and updates the current system of fragmented national civil aviation authorities will create economies of scale that allow the organization to become financially self-sustaining, while at the same time lowering costs and improving service quality.

National CAAs are benefitting from higher quality services through the coordinated and collaborative business and inspection methods that minimize the costs of safety and security oversight. Their capacity to administer and regulate the sector with their respective country developed and strengthened.

The governments of member countries that will be able to rationalize their civil aviation administrations and lower public sector costs.

Air Transport Operators
Operators are experiencing lower regulatory compliance costs and more responsive services.

Airlines will face a consistent operating environment in all countries, thus improving safety and reducing costs.

Users of Air Transport Services
Users will benefit from higher safety and security standards, and eventually pay lower price for the services.

Are there any lessons to be learnt of how this SSC activity/project might improve overall technical cooperation, including that delivered from Northern actors/developed countries?
The institutional lessons arise from the need for cooperation on the part of governments, airlines, and international agencies in reforming and harmonizing the regulatory and legislative environment.

PASO's sustainability relies mainly on the full engagement and cooperation of members to fully utilize services to generate sufficient revenue to maintain operations. Under-utilization of services results to operational revenues falling below projection resulting to faster depletion of loan proceeds.

Duration:

PASO was formed in 11 June 2005, and it is still operating.

Budget (Optional):

The total project cost for the first five years was estimated at US$2.4 million. ADB provided funding of US$1.9 million in the form of a loan made directly to PASO. ADB financing is complemented by counterpart contributions. The participating governments of the Independent State of Papua New Guinea, the Independent State of Samoa, the Kingdom of Tonga, and the Republic of Vanuatu each guaranteed one fourth of the total.Government counterpart funding provided US$500,000 in the form of annual membership fees from all PASO member countries, and the in-kind contribution of offices and administrative staff from the Government of Vanuatu. An associated technical assistance (TA) grant financed regulatory and legislative harmonization and recertification of airlines, with additional funding of US$130,000 from the New Zealand Government Security Fund. PASO received funds totaling US$200,000 IFFAS which is operated by the International Civil Aviation Organization (ICAO).

Name of Primary Contact Person:

Mr. Robert Guild

Title of Primary Contact Person:

Principal Transport Specialist, Pacific Department, Asian Development Bank

City:

Mandaluyong City Metro Manila, Philippines